B-174900, MAR 7, 1972

B-174900, MAR 7, 1972

SALES CONTRACT - MISTAKE IN BID - RELIEF DECISION ALLOWING RELIEF OF BEAUMONT IRON AND METAL COMPANY FOR MISTAKE IN BID ON A SURPLUS SALES CONTRACT WITH THE DEFENSE SURPLUS SALES OFFICE, FORT WORTH, TEXAS. IN VIEW OF THE SUBSTANTIAL DISPARITY BETWEEN BEAUMONT'S BID AND THE NEXT HIGH BID, AND THE CURRENT MARKET APPRAISAL OF THE SUBJECT ITEM, IT IS THE OPINION OF THE COMP. GEN. THAT THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF THE ERROR AND THAT THE BID SHOULD HAVE BEEN VERIFIED PRIOR TO AWARD. B-173981, DECEMBER 9, 1971. ACCORDINGLY, THE CONTRACT MAY BE CANCELLED WITHOUT LIABILITY AS ADMINISTRATIVELY RECOMMENDED.

TO GENERAL WALLACE H. ROBINSON:

REFERENCE IS MADE TO LETTER DSAH-G DATED JANUARY 4, 1972, WITH ENCLOSURES, FROM THE ASSISTANT COUNSEL, HEADQUARTERS, CAMERON STATION, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR ALLEGED BY THE BEAUMONT IRON & METAL COMPANY TO HAVE BEEN MADE IN ITS BID UPON WHICH SALES CONTRACT NO. 37-2050-134 IS BASED.

THE DEFENSE SURPLUS SALES OFFICE, FORT WORTH, TEXAS, BY INVITATION FOR BIDS NO. 37-2050 REQUESTED BIDS FOR THE PURCHASE FROM THE GOVERNMENT OF VARIOUS ITEMS, INCLUDING ITEM 42 DESCRIBED AS BRASS, IRONY, SCRAP, 34,880 POUNDS. IN RESPONSE, BEAUMONT IRON & METAL COMPANY SUBMITTED A BID DATED OCTOBER 11, 1971, OFFERING TO PURCHASE, AMONG OTHER ITEMS, THE SCRAP UNDER ITEM 42 AT A UNIT PRICE OF $0.1801 PER POUND. THE BID OF THE COMPANY WAS ACCEPTED AS TO ITEM 42 ON NOVEMBER 3, 1971, WITHOUT VERIFICATION.

IT IS REPORTED THAT ON NOVEMBER 10, 1971, BEAUMONT'S REPRESENTATIVE TELEPHONED THE SALES CONTRACTING OFFICER AND ALLEGED THAT AN ERROR HAD BEEN MADE ON ITEM 42 OF ITS BID IN THAT IT HAD ERRONEOUSLY USED A SAMPLE FROM THE PROPERTY COVERED BY ITEM 19 IN ARRIVING AT ITS BID PRICE FOR ITEM 42 WHICH CAUSED ITS BID TO BE TOO HIGH.

BY LETTER DATED NOVEMBER 15, 1971, BEAUMONT REQUESTED THAT THE SALES CONTRACT BE CANCELED WITHOUT LIABILITY TO THE COMPANY FOR THE REASONS GIVEN ON NOVEMBER 10.

THE ABSTRACT OF BIDS SHOWS THAT THE EIGHT OTHER BIDS ON ITEM 42 RANGED FROM $0.126 TO $0.011143 PER POUND. THE CURRENT MARKET APPRAISAL VALUE, KNOWN TO THE CONTRACTING OFFICER PRIOR TO BID OPENING, WAS $0.11 PER POUND. THE CONTRACTING OFFICER'S SUPPLEMENTAL REPORT STATES THAT WHILE SOME OF THE ITEMS OFFERED FOR SALE INCLUDED USABLE PROPERTY, ITEM 19 DID NOT REASONABLY HAVE VALUE OTHER THAN FOR ITS BASIC MATERIAL CONTENT. THAT CONNECTION, COUNSEL FOR THE DEFENSE LOGISTICS SERVICES CENTER EXPRESSES THE OPINION THAT THE CONTRACTING OFFICER SHOULD HAVE REQUESTED VERIFICATION OF THE COMPANY'S BID. THE BASIS OF THE OPINION IS THAT THE PROPERTY OFFERED FOR SALE UNDER ITEM 42 CONSISTED OF SCRAP METAL; THAT IT IS A GENERALLY ACCEPTED FACT THAT BIDS ON SCRAP METAL DO NOT VARY AS GREATLY AS DO BIDS ON USABLE SURPLUS PROPERTY; AND THAT THERE IS A SUBSTANTIAL DISPARITY BETWEEN THE COMPANY'S BID ON ITEM 42 AND THE NEXT HIGH BID AND THE CURRENT MARKET APPRAISAL OF THAT ITEM. WE AGREE THAT THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE NOTICE OF ERROR AND THAT THE BID SHOULD HAVE BEEN VERIFIED PRIOR TO AWARD. SEE 49 COMP. GEN. 199, 202 (1969); B-169892, JUNE 3, 1970; B-172880, JUNE 2, 1971; B-173360, JULY 20, 1971; B-174321, NOVEMBER 23, 1971; B-173981, DECEMBER 9, 1971.

ACCORDINGLY, CONTRACT NO. 37-2050-134 MAY BE CANCELED WITHOUT LIABILITY TO THE COMPANY AS ADMINISTRATIVELY RECOMMENDED.